Electricity cheaper to make, but bills still rising

Natural gas, which produces nearly 1/3 of U.S. power, is 43% cheaper than year ago

Published: 07/11/2012 at 6:19 PM

(Associated Press) A plunge in the price of natural gas has made it cheaper for utilities to produce electricity. But the savings aren’t translating to lower rates for customers. Instead, U.S. electricity prices are going up.

Electricity prices are forecast to rise slightly this summer. But any increase is noteworthy because natural gas, which is used to produce nearly a third of the country’s power, is 43 percent cheaper than a year ago. A long-term downward trend in power prices could be starting to reverse, analysts say.

“It’s caused us to scratch our heads,” says Tyler Hodge, an analyst at the Energy Department who studies electricity prices.